Raghuram Rajan, former RBI Governor
Former Governor of Reserve Bank of India Raghuram Rajan recently commented that India is dangerously close to the “Hindu rate of growth” as the country sees limited investment in private sector, high-interest rates, and decreasing global growth. Rajan’s denigrating statement points to an earlier concerted effort to defame India and Hindutva on the economic front.
THE DEFAMATORY TERM
It was Raj Krishna, an Indian economist, who rose to notoriety for coining the term “Hindu rate of growth” in 1978, to describe the slow annual growth that averaged between 3.5-4 per cent during the period from 1950s to 1980s (Chapter3 of Statistical Year Book – Ministry of Statistics and Program Implementation- MOSPI). Thereafter, the anti-Hindutva lobby has conveniently propagated the term to indicate slow economy, backwardness, and low economic growth rates since Independence. Raj Krishna’s coining of the term ‘Hindu rate of growth’ was publicised globally by the then World Bank President, Robert McNamara, in 1980s.
However, many critics have pointed out that the period from 1950s to the end of 1980s should have been termed as “Nehruvian socialist rate of growth” and not “Hindu rate of growth”, since throughout this period India experienced the impact of Nehru’s experiment with the Russian model of socialist economics. The experiment miserably failed. During this period, growth stagnated around 3.5 per cent, while per capita income growth averaged 1.3 per cent. Another Congressman, Dr Manmohan Singh, endorsed the failure of the Nehruvian Russian model of Socialism in India in the early 1990s and officially inaugurated the opposite stream of American model of capitalism coining the fascinating name “globalisation”.
Max Weber had disqualified India and China in the history of economic development for following Hindu and Buddhist religions. Max Weber had even concluded that lack of the ‘spirit of capitalism’ in Indian society is attributed to the absence of ‘a rational practical ethic’. But Anthony Giddens who wrote the introduction to Weber’s book The Protestant Ethic and the Spirit of Capitalism clearly admits that “during the same period at which Hinduism became systematised, trade and manufacture reached a peak in India.”
Karl Marx had said India is a backward country which worships monkey, elephant and cows. The tradition of Karl Marx, Max Weber-Raj Krishna-McNamara to trivialise Hindu India was later carried forward by Montek Singh Ahluwalia who endorsed Raj Krishna’s description of India in the new millennium. Now it is the turn of people like Raghuram Rajan to carry on the mischief.
THE REAL “HINDU RATE OF GROWTH”
Exactly five years later, Raja Krishna’s colonial theory trashing Hindus for India’s low growth was blasted in 1983. Two studies, one by Paul Bairoch, a Belgian economic historian and another by Angus Maddison, as approved by OECD (The Organisation for Economic Cooperation and Development), proved that actually the “Hindu rate of growth” had kept India the most powerful economy of the world for 1850 years out of 2,000 years of world economic history.
In 1983, Paul Bairoch, a Belgian economic historian, came out with his study of the world economy from 1750 to 1980 and his findings astounded the West. He said that in 1750, India’s share of world GDP was 24.5 per cent, China’s 32.8 per cent and Europe’s 23.2 per cent, but the combined share of Britain and the US was only just 2 per cent! India and China together accounted for 57.3 per cent of world manufacturing output. Bairoch shook the West by saying that in mid 19th century, the West had a lower standard of living than Indians and Chinese.
Bairoch’s revelation shocked the capitalist world. OECD (The Organisation for Economic Cooperation and Development), an organisation formed by the capitalist countries, immediately constituted a Development Institute Studies under Angus Maddison, a great economic historian, to conduct comprehensive research into economic history and check the veracity of Bairoch’s study. The real intention for directing such a study was to prove Bairoch wrong. Angus Maddison, after two decades of hard work, published his studies – World Economic History-A Millennial Perspective in 2001. But against all expectations, his study also confirmed Bairoch’s conclusions.
Maddison showed that Hindu India was the leading economic power of the world with 32 per cent share of world’s GDP in the first 1000 years (AD 1 to 1000) and 28 per cent to 24 per cent in the second millennium till 1700
Maddison studied the entire 2000 years of economic history. The study revealed that Hindu India was the richest country in the world before the Industrial Revolution and foreign colonial rule. Maddison showed that Hindu India was the leading economic power of the world with 32 per cent share of world’s GDP in the first 1000 years (AD 1 to 1000) and 28 per cent to 24 per cent in the second millennium till 1700. In 1700 AD India’s share was 24.43 per cent. China was second to India and it was only in 1600 that China temporarily overtook India. India again overtook China in 1700. Thus till 1830, the global economic play was with Hindu India and Buddhist China. The Bairoch-Maddison studies have also been corroborated by other studies and records. One such report is the ancient historian Pliny the Elder’s reference about India (‘Natural History’, 6.21, 6.26 and 12.41). He talks about the growing anxiety of the Roman Senate on the drain of significant part of gold and wealth of the Roman empire due to the regular import of pepper and other spices from India.
FALL OF INDIA’S ECONOMY
Bairoch found that India’s share fell from 20 per cent in 1800; to 18 per cent in 1830; and finally crashed to 1.7 per cent in 1900, while China’s crashed from 33 per cent to 6.2 per cent. In 1800, China and India accounted for 53 per cent of the world’s GDP and in 1900 they accounted for only 7.9 per cent. In these 150 years, the combined share of Britain and the US rose from mere 2 per cent to over 41 per cent. The Industrial Revolution owed much to India’s wealth that was looted away by the British. Consequent colonial looting led India to poverty. Nehruvian socialism made it stagnate further even after freedom. This has led to the “Nehruvian socialist rate of growth” at the rate of about 3.5 per cent.
The derogatory term was coined with the 1950-80 period in mind. This period of Indian economy should actually have been termed as the “Nehruvian socialist rate of growth”, since throughout this period India suffered the impact of Nehru’s experiment with the Russian model of socialist economics
Maddison also confirmed and confessed that Hindu India declined only due to colonial exploitation. Now the Maddison study, endorsed by OECD, is the most authentic economic history of the world. He postulated that the advantage of Europe and backwardness of the third world including India was due to colonial exploitation and not due to any scientific advancement or other superiorities. Angus Maddison says: “If Bairoch is right, then much more of the backwardness of the third world presumably has to be explained by colonial exploitation” and “much less of Europe’s advantage can be due to scientific precocity, centuries of slow accumulation, and organisational and financial superiority”. India is rich in natural resources and human resources. Thus, it is said about India in comparison to Japan that “India is a rich country inhabited by the poor” and “Japan is a poor country inhabited by the rich”!
Raja Krishna brigade’s distorted understanding about India’s economy or other ulterior intentions led to the terming of low rate of growth as “Hindu rate of Growth”.
In the new era of AtmaNirbhar Bharat, when India stands high among the comity of nations on economic and other aspects, every nationalist proudly aspires to the resurgence of the “Hindu rate of growth” achieved in the glorious past. People with colonial mindset should not be allowed to tamper with such aspirations. Hence it will be appropriate for Raghuram Rajan to apologise to the nation for his irresponsible statement that pains all the nationalists in India.
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